According to a recent study there are four significant portfolio functions that can significantly impact your actual returns.
1. Discipline. This contributes to the difference between “investor return vs. investment return. Perhaps you’ve heard the market averages 10% over time. However, the average investor receives much less than that. Why? Not having a long term plan leads to emotional buying and selling at just the wrong times.
2. Systematic Rebalancing. Ok, you started with a plan but now it’s out of whack due to market volatility in different sectors. How do you adjust and get back to your plan? Particularly if you have various accounts spread around. Rebalancing is one of the great features of the Eqis Portfolio.
3. Diversification. This has less to do with the “number” of slices of the pie you have, than how those slices tend to interact with each other. Done properly this will seek additional returns with minimal additional risk exposure.
4. Tax Efficiency. The winner does not take all! The IRS gets their piece first. Positioning IRA accounts differently than regular accounts (non-qualified) based on differing tax exposures is critical. This becomes even more significant when you begin taking income from your assets.